By a News Reporter-Staff News Editor at Real Estate Weekly News -- Redwood Trust, Inc. (NYSE: RWT) announced that it has agreed with the Federal Home Loan Bank of Chicago (FHLBC) to establish MPF Direct™, a new mortgage purchase product offered by the Mortgage Partnership Finance(®) (MPF(®)) Program. MPF Direct will allow members of a Federal Home Loan Bank that participate in the MPF Program to deliver eligible residential high-balance mortgage loans through the MPF Program's operational platform to subsidiaries of Redwood Trust.
Under the agreement, Redwood Trust will be the sole investor in MPF Direct loans for a period of three years. The launch of MPF Direct is subject to the final regulatory approval from the Federal Housing Finance Agency.
Marty Hughes, CEO of Redwood Trust, said "MPF Direct is a great example of how the private sector can work with the FHLBank System to increase the availability of mortgage credit and increase the types of mortgage products that FHLBank members can offer to their customers." Mr. Hughes continued, "We expect to start investing in MPF Direct loans during the second half of 2014."
"Many FHLBank members currently can't offer high-balance, fixed-rate loans to their customers or are forced to sell the loans to a competitor and risk losing the customer relationship," said John Stocchetti, Executive Vice President & Group Head, Mortgage Partnership Finance Program at the FHLBC, which operates the MPF Program for the FHLBank System. "MPF Direct was designed to offer superior execution to the members in a manner that allows them to retain the customer relationship and their deposits. In addition, MPF Direct will add private capital to the secondary mortgage market."
Redwood Trust also announced that its subsidiary, RWT Financial, LLC, has been approved for membership in the FHLBC, effective June 6, 2014. Through this membership, Redwood Trust will have access to financing offered by the FHLBC for certain assets.
"Membership in the FHLBC marks an important development for our company and adds to our financing and distribution options for residential mortgage loans," said Brett Nicholas, President of Redwood Trust. Mr. Nicholas added, "This additional financing source should enable Redwood to expand the types of residential mortgage loan products we can acquire from mortgage loan originators. Ultimately, we believe that mortgage loan borrowers, and the communities in which they live, will benefit from the additional liquidity Redwood is able to provide, consistent with the mission of the FHLBank System."
Keywords for this news article include: Mortgage, Real Estate, Redwood Trust Inc.
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